Changes in cryptocurrency regulatory policies significantly impact the market. Stricter regulations, like enhanced KYC/AML requirements or bans on certain activities, often lead to short-term price drops as investor confidence wavers and trading volumes decline. For instance, China’s 2021 crypto crackdown triggered a sharp market sell-off. Conversely, clear and supportive policies, such as the U.S. approving Bitcoin ETFs in 2024, boost adoption and drive prices upward by attracting institutional capital. Regulatory uncertainty creates volatility, as traders react to rumors and news, while long-term clarity fosters stability and growth. Smaller altcoins tend to suffer more under tight rules due to compliance costs, whereas Bitcoin often emerges resilient. Ultimately, the balance between innovation and oversight shapes market sentiment, liquidity, and the global crypto ecosystem.